PMetal: Top-line & bottom-line inched higher!

Results Update

For QE31/3/2015, PMetal's net profit rose by 3% q-o-q or 54% y-o-y to RM43.1 million while revenue dropped 7% q-o-q but rose 18% y-o-y to RM1.06 billion. Its PBT rose q-o-q from RM60.8 mil to RM70.2 mil accounting for unrealised forex losses of RM97.0 mil & RM80.9 mil respectively. If forex losses are excluded, PBT would be adjusted to RM167.2 mil & RM141.7 mil for QE31/3/2015 & 31/12/2014 respectively.


Table 1: PMetal's last 8 quarterly results


Chart 1: PMetal's 30 quarterly results

Aluminium Outlook

Aluminium is still trading sideways at around USD1800/MT.


Chart 2: Aluminium's monthly chart as at May 6, 2015 (Source: LME) 

Valuation

PMetal (closed at RM2.85 yesterday) is now trading at a PER of 13 times (based on last 4 quarters' EPS of 22 sen). At this PER, PMetal is deemed fairly valued.

Technical Outlook

PMetal broke above the line connecting its 2007 & 2011 peaks at RM1.70-1.75 in early 2014. It rose to a high of RM3.66 in September 2014. During the market selldown in December last year, the share price dropped back to RM2.20 before recovering.

PMetal's monthly MACD is about to crossover its MACD signal line. The last 2 times that these happened (early 2008 & middle of 2011), the share price dropped sharply. These sell signals coincided with the share price dropping below the 10-month EMA line. Currently, PMetal is resting on its 10-month EMA line at RM2.80. Thus, PMetal could enter into a downtrend if the share price goes below RM2.80 and the MACD flashes signal line crossover.


Chart 3: PMetal's monthly chart as at May 6, 2015 (Source: ShareInvestor.com)

Conclusion

Based on satisfactory financial performance (albeit large unrealized forex losses) & reasonable valuation, PMetal is considered a good stock for medium-term investment. However, we have to be careful that the share prices remain above RM2.80. A drop below that level could signal the start of a downtrend for the stock.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Pmetal.